Markets likely to start on a cautious note on penultimate day of F&O series expiry

The Indian markets extended their northbound journey in last session; news of Greece along with the encouraging first ever CPI-based inflation data helped the markets outperform their regional peers. Today is the penultimate day of the February F&O series and the mood may turn volatile in latter part of the day; however the markets are likely to finish another good series. Rate sensitive sectors are likely to get some upmove as the RBI deputy governor Subir Gokarn has said that the apex bank will consider a further cut in the cash reserve ratio (CRR) if the systemic liquidity conditions continue to be tight, though he ruled out any immediate action. Meanwhile, the telecom sector too may be buzzing as the government has clarified that it has no plans to seek a review of the Supreme Court's orders to cancel 122 mobile phone licences dished out by former telecom minister A Raja, but may consider becoming a 'party to the case' when impacted companies approach the court. In the scrip specific action, Kingfisher may be in limelight as aviation regulator's, the Directorate General of Civil Aviation (DGCA) set 24-hour deadline for the Airlines to come up with a realistic flight schedule ends today.

The US markets made a mixed closing on Tuesday; the news of Greece securing a bailout to avoid a disorderly default seemed to have priced in and the investors rather concentrated on domestic issue. However, Dow breaching 13,000 for the first time since May 2008 helped the markets recover in late trade. The Asian markets have made a mixed start and most of the indices are in red, Greece’s approval for a second bailout failed to spur confidence among investors as they were of the opinion that it may not be enough to end the debt crisis.

Back home, first trading day of February series F&O expiry week turned out to be an encouraging one for the key benchmark indices which climbed to the levels not seen since July 25, 2011 on large volumes. Boisterous indices showcased yet another enthusiastic performance on Tuesday by extending the gaining streak for second consecutive session and breaking a lot of psychological levels on the northbound journey. The frontline indices re-captured the psychological 5,600 (Nifty) and 18,400 (Sensex) levels in the session after garnering three fourth of a percentage points. The gains appeared even more prominent as they came on a day when most Asian markets exhibited uninspiring trends. Coming from an extended weekend, investors took to hefty across the board buying on the back of encouraging reports that Finance ministers from the Euro-zone have finally struck a deal for Greece's second bailout package however, details were still being worked out in the early hours of Tuesday, more than 12 hours after discussions began. Earlier on the Dalal Street, the benchmark got off to a positive opening as investors shrugged pessimistic sentiments prevailing in Asian markets. The frontline indices took advantage of the initial impetus and remained in fine fettle through the morning trades. The rate sensitive Realty pocket witnessed hefty position buildup as it settled with over four percent gains while stocks from the power sector continued to hog the limelight once again. However, the information technology counter remained the only chink in the armor as it settled in the negative terrain with marginal losses. Eventually, the NSE’s 50-share broadly followed index Nifty climbed by three fourth percent to close above the crucial 5,600 support level while Bombay Stock Exchange’s Sensitive Index or Sensex garnered over a hundred and thirty points and ended below the psychological 18,400 mark. Moreover, the broader markets too traded with fervor and amassed around a percent gains, outperforming their larger peers. Finally, the BSE Sensex gained 139.26 points or 0.76% to settle at 18,428.61, while the S&P CNX Nifty rose by 42.85 points or 0.77% to close at 5,607.15.

The US markets pared early gains and made a mixed closing on Tuesday, though European officials agreed to another round of aid for Greece, pushing the Dow industrials briefly above 13,000 for the first time since 2008. The euro zone ministers, the International Monetary Fund and the European Central Bank approved the second bailout but only after more than thirteen hours of negotiations. The second bailout agreed first in October was derailed as Greece faltered in implementing its austerity measures and European politicians demanded stricter conditions. The 130 billion euros, or $173 billion, financial package still left doubts, however, about how durable the fix would prove. An analysis by European and International Monetary Fund officials reportedly concluded Greece’s debt could widen to 160% of its gross domestic product in 2020. The nation signed up to a program of austerity and economic reform aimed at slashing debt to 120.5 percent of gross domestic product by 2020 from about 160 percent last year. Besides, Spain auctioned €2.5 billion worth of treasury bills at lower yields.

In US, earnings at Home Depot rose while Wal-Mart Stores declined. The Home Depot, Inc., the home improvement retailer reported fourth quarter net sales grew 5.9% to $16.01 billion from $15.13 billion in the same quarter last year. Wal-Mart Stores, Inc., the operator of retail stores reported fourth quarter net sales rose 5.8% to $122.3 billion from $115.6 billion in the same quarter last year.

The Dow Jones Industrial Average closed higher by 15.82 points, or 0.12 percent, at 12,965.70. The S&P 500 gained 0.98 points, or 0.07 percent, at 1,362.21, while the Nasdaq was down by 3.21 points, or 0.11 percent, at 2,948.57.Crude oil prices rallied by over two and half a percent on Tuesday as investors coming after an extended weekend took to hefty position build up in the commodity after Euro-zone finance ministers approved the much awaited second bailout package for Greece. The fuel prices extended their gaining streak for the fourth straight session and went on to scale nine month high levels amid lingering supply side concerns after Iran reaffirmed threats and warned European companies to sign long-term contracts. Benchmark crude for March delivery jumped $2.60 or 2.52% to $105.84 a barrel on the New York Mercantile Exchange. In London, April delivery Brent crude surged $1.61 or 1.34% to close at $121.66 a barrel on the ICE.